21 Mar

The Chancellor announced a second major round of financial stimulus on 20th March 2020- here are the essentials based on several sources:

  • A Coronavirus Job Retention Scheme
  • Deferring VAT and Income Tax payments
  • A Statutory Sick Pay relief package for SMEs
  • A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge Coronavirus disruption to their cash flows through loans
  • The HMRC Time To Pay Scheme

The Coronavirus Job Retention Scheme (CJRS)- the basics (detailed guidance to be published by Government):

  • Who & what is covered by the CJRS:
    • HMRC to reimburse 80% of 'furloughed' workers wage costs up to a cap of £2,500 per month (therefore maximum reimbursement will be £2,000 pm per employee) 
    • Furlough is anyone asked to stop working during the Coronavirus pandemic but not made redundant
    • CJRS will be backdated to 1st March & open initially for "at least" three months  
    • No limit” on the amount of money payable through the scheme
    • SJRS applies to everyone on PAYE through a company
    • HMRC working urgently to set up reimbursement system 
    • Existing systems are not set up to facilitate payments to employers
    • All UK businesses are eligible, including not-for-profit organisations
  • How to apply for CJRS:
    • designate affected employees as ‘furloughed workers
    • notify your employees of this change
    • changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
    • submit information to HMRC about furloughed employees & their earnings through a new HMRC online portal (to be announced) 

VAT Deferral:

  • The deferral will apply from 20 March 2020 until 30 June 2020 
  • All UK businesses are eligible

Income Tax:

  • Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021
  • All self-employed are eligible
  • No applications to HMRC required

Statutory Sick Pay (SSP):

  • New legislation required for scheme
  • SMEs & employers to reclaim SSP paid for absence due to COVID-19 
  • Applies to all businesses based in UK with fewer than 250 employees as of 28th February 2020 (despite there being a 29th February in this leap year)
  • Eligibility as follows:
    • Refund to cover up to 2 weeks’ SSP per eligible employee off work due to COVID-19
    • Employers can reclaim expenditure for employees who has claimed SSP (according to the new eligibility criteria) due to COVID-19
    • Employers must keep of staff absences and payments of SSP
    • No GP fit note required by employees but if evidence is required by an employer an online isolation note from NHS 111 can be obtained from the NHS website
    • Eligible period for the scheme starts the day after the regulations on the extension of SSP to those staying at home comes into force
    • The government to work with employers over the coming months to set up the repayment mechanism

Business Rates Holiday:

  • No business rates payable in the 2020 to 2021 tax year for retail, hospitality and leisure businesses in premises used as:
    • shops, restaurants, cafes, drinking establishments, cinemas and live music venues
    • for assembly and leisure
    • as hotels, guest & boarding premises and self-catering accommodation
  • Estimate  business rate charge no longer payable this year using the business rates calculator.
  • No action required- holiday to be applied in next council tax bill in April 2020

Cash grants for retail, hospitality and leisure businesses:

  • Rateable value of premises  under £15,000- grant of £10,000
  • Rateable value of premises between £15,001 and £51,000- grant of £25,000
  • No action required- local authority will write to eligible businesses   

Additional Small Business Grant Scheme:

  • One-off grant of £10,000 to eligible businesses to help meet ongoing business costs
  • Applies to businesses:
    • based in England
    • receiving small business rate relief (SBBR), rural rate relief (RRR) and tapered relief SBBR and/or RRR
    • occupies property
  • No action required- local authority will write to eligible businesses  

Coronavirus Business Interruption Loan Scheme (commencing on 23rd March 2020):

  • Government to guarantee 80% of each loan made under scheme 
  • Guarantee to apply to loans up to £5m in value
  • Businesses to pay no interest for first 12 months 
  • Government will pay the interest charged by lenders for first 12 months
  • There will be a per-lender cap on claims under the guarantee
  • No fees to be charged by Government for providing the guarantee either to banks or customers
  • There are 40 accredited lenders in all
  • Applies to:
    • UK based businesses with a turnover of no more than £45 million per year
    • businesses meeting the other British Business Bank eligibility criteria

Tax- Time to Pay Service:

  • The following may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service:
    • all businesses and self-employed people
    • who are in financial distress and 
    • with outstanding tax liabilities
  • HMRC’s dedicated helpline: 0800 0159 559

Further details will be included as and when the Government publishes detailed provisions of the Coronavirus financial support for businesses.

By the publications team at: Contracts-Direct.com

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